- British Prime Minister David Cameron
• Summit will be dominated by German treaty demandOctober 28, 2010 (KATAKAMI / GUARDIAN.CO.UK) --- David Cameron is planning to approve a £435m increase in Britain's contribution to the EU next year, prompting a row with the Tory right as he admits defeat in a battle to freeze Europe's budget.
As Eurosceptics in the party turned on the government in an emergency Commons debate on the EU, the prime minister told fellow European leaders ahead of today's summit in Brussels that he accepts the £107bn EU budget will have to increase by a minimum of 2.9%. This will take the budget to £110.2bn, with Britain contributing an extra £435.2m.
Cameron last night embarked on a diplomatic offensive by telephone to try to keep the rise to a minimum – and well below the 5.9% demanded by MEPs – at a time when many countries, including the UK, are cutting national spending.
The prime minister spoke to Angela Merkel, the German chancellor, Nicolas Sarkozy, the French president, and Herman van Rompuy, the president of the European council, about the budget, which is not on the formal agenda of today's summit but will dominate conversations on the sidelines and in meetings between government heads and officials.
David Lidington, the Europe minister, said today that the prime minister would be concentrating on trying to persuade fellow leaders of the importance of the budget issue. He told BBC Radio 4's Today programme: "What he's going to be focusing on is saying that whether it's 2011 or the more important long-term deal over the European budget, this is really something that deserves the highest priority among the leaders of all member states."
The European council has already agreed in principle a 2.9% increase, however, and British officials acknowledge that that is the minimum by which it will rise. The final figure is likely to be somewhere between 2.9% and the MEPs' preferred 5.9% and will set a baseline for the longer-term "financial perspective" which will determine the budget between 2014 and 2020.
"We are gearing up for the financial perspectives," one source said of the negotiations at which Britain's EU budget rebate will be on the table. In these negotiations Britain has a veto, unlike the annual budget negotiations, which are decided by qualified majority voting.
Cameron is trying to assemble a bloc of European leaders who can head off the MEPs' demands and ensure that the financial perspective is kept down. He also spoke to Fredrik Reinfeldt, the Swedish prime minister, and Yves Leterme, his Belgian counterpart, last night.
A Downing Street spokesman said: "In all of his calls, he set out the case for fiscal discipline in the EU budget. Many countries across Europe had engaged in challenging national programmes to cut spending and rein in budget deficits. The eurozone itself had been working on new arrangements for ensuring individual members of the eurozone managed their public finances responsibly.
"Now the EU as a whole needed to show that it would make its contribution too. This meant agreeing the lowest possible EU budget for 2011, and demonstrating real restraint as we approached negotiations on the next financial perspective."
Even accepting the 2.9% budget increase will anger Tory Eurosceptics who have been urging the government to fight for a freeze or a cut.
Labour has accused the Tories of failing to "stand up for the British interest". Wayne David, the shadow Europe minister, said: "In government Labour argued strongly for a freeze in this year's
European Union budget, and Labour MEPs voted against the increase in the European parliament. The
Conservatives have talked tough on this issue but they haven't got a result. Instead they have entered government isolated, and failed to stand up for the British interest in their first budget test. The Tories are desperate to not talk about Europe, but their failure to speak up is costing Britain."
The concession over the budget represents a blow for Cameron, who said as recently as last week that he wanted to see the sum cut, or at least frozen, as Europe plays its part in reducing costs during a period of fiscal austerity.
Today's summit will be dominated by German demands for a new EU treaty. Merkel is facing a backlash from small EU states over her demand that the €110bn bailout for Greece and the wider €750bn bailout fund for others must be placed on a legally watertight basis.
Cameron, who had hoped that the EU would not need to undergo treaty change for another decade, is expected to tell the German chancellor that Britain will find it easier to support her demands if the budget is trimmed.
One British government official commented: "Treaty change is not where we would want to be at this time, but we will see what happens [at the summit]. We would not go along with any changes which would amount to a transfer of more powers to Brussels, but eurozone economic sanctions do not apply to us.
"On the other hand, 40% of our exports are to the eurozone member states and it is important to us that there is economic stability in the eurozone so we support whatever measures are necessary [to maintain stability]."
Lidington said this morning: "It's very far from clear there is a consensus even with the eurozone countries for a treaty change. We are not going to sign up to any treaty change that transfers powers from the United Kingdom to Brussels institutions."
Yesterday Mark Hoban, the financial secretary to the Treasury, also made this point, telling the Commons: "We will not agree to any changes to EU treaties that would move more powers from this country to the EU. The UK's exemption from the sanctions proposal will be explicit. There will be no shift in sovereignty from Westminster to Brussels."
No 10 was given a taste of the perils of EU negotiations yesterday when a host of Eurosceptic Tories stood up during the Commons emergency debate to denounce the proposed budget increase and the German demands for treaty change.
Peter Lilley, the former cabinet minister famously denounced by John Major as a Eurosceptic "bastard", said Cameron should demand concessions as the price for agreeing to a treaty change. In a question Lilley said: "Can he assure me that we will not give that support without demanding a price? This is the ideal opportunity to obtain that price."
